Garuda Indonesia Remains in Red in Sept., Confident for Final Quarter
Jakarta. National flag carrier Garuda Indonesia expects a turnaround in its financial performance for the remainder of the year, on the back of revenue from hajj services and rising occupancy rates on new routes.
The airline was in the red in the the first nine-months of this year after spikes in pilot, currency and aircraft rental costs taking a chunk of its stagnated revenue. The airline booked $44 million in net losses in that period, from $50 million of net income in the same period last year, according to its consolidated financial report published on Monday (31/10).
"Our loss was also contributed by the additional international route in second quarter this year as we aims to increase our capacity," Garuda Indonesia chief executive Arif Wibowo said.
The company opened its new direct Jakarta to London route at the end of March this year, during the low travel season, replacing the London via Amsterdam route. Arif said the company expects it will be eight months before the company benefits from the route.
Immediately after launching the route, the company saw only 40 to 50 percent occupancy rates, but Arif says that number has since surged, reaching 70 percent in October.
He expects the company's performance to rebound at the end of the year, with Garuda launching more flights to Mecca for umrah, the pilgrimage to the holy city during the non-hajj season.
Arif said the airline was on route to cut $215 million from total operating costs this year, providing a stronger footing for future performances.
"In term of July to September performance alone, we actually book $19 million profit," he said.
In the first nine months this year airline's revenue slightly increased to $2.86 billion from $2.84 billion last year, despite a 5.7 percent increase in number of passengers to 26 million in the period from 24.6 million.
Operating expenses increased 2.8 percent to $2.86 billion from $2.78 billion last year, while the company booked currency losses at $21.76 million as of September from $33.97 million of currency gains in the corresponding period last year.
Aircraft rental cost to $751.5 million, up 14 percent from $659.9 million last year, as the company's added 17 aircraft this year in total, included several units of Airbus 302, from 18 aircraft last year. That also include the re-delivery cost for six aircraft — fees for returning the aircraft after the rental period is completed — in the second and third quarter this year, Arif said.
The cost of its aircraft recondition, interior renovation, the maintenance cost, and the other factor such as pilots salary also weighed down the company's operating expense.
Garuda Indonesia's hotel and land transportation service subsidiary unit, Aerowisata also noted 67.3 percent decline of its net income to Rp 46 million in the first nine months this year from Rp 77 million in the same period last year.
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